Property Market 2020

GreeBo

JimmyVik wrote: »

I just dont see why anyone would get into it.

Long term asset appreciation, which is made considerably easier if you buy during a "recession" as people are predicting (on here)

If I have 200K sitting in the bank, I buy a 400K house for 350 and pay 1K a month in mortgage over 20 years.

That 50K saving on the price pays a lot of mortage and any rental income goes on top. Even if I only break even I have an asset that will be worth more than 350K in 20 years (it will likely be worth more than that in 3-5 years)

ittakestwo

JimmyVik wrote: »

I actually know some of them.
I worked in Tokyo for a year in 2017.
Spoke about this often with workmates. The said they had it hard for a few years, but things are fine there now.
Also I think Ireland Ireland had worse in the last one than they ever had it.

Hotels there are definitely better value than Ireland. And rent is reasonable enough too.

Give me another example though. How many developed economies in the world can we say have had a crash and not recovered prices for 20 years.

I did give you an example... prices today in Japan are c. 40% below what they were in 1990

GreeBo

ittakestwo wrote: »

I did give you an example... prices today in Japan are c. 40% below what they were in 1990

are they?
I posted this earlier:
https://asia.nikkei.com/Business/Markets/Property/Tokyo-property-prices-near-bubble-era-levels

Where are you getting your 40% from?

fliball123

JimmyVik wrote: »

Or someone who is plunged back into negative equity when they were nearly out and now cant sell.
My bet is there wont get any new blood into buy to let.
Nobody with any financial cop on would sink money into buy to let now.

All you will have is the ones who were already stuck with it.


And then you have the REITs. I think that will grow and they should be taxed at the same rate as normal landords.

Well it depends on how low prices go. If some of the amateur Nostradamus's on here are to be believed we are looking at 30 to 50% drop ,if that does happen and its a really big IF there could be good value to be had in buy to let market.

JimmyVik

GreeBo wrote: »

If all house prices drop by 10% then I gain by selling my 750K house and buying a 1M house.

You might even gain more because that price range would probably drop by more than a lower price range. But are you still in the market at this time is the question. There weere a few years where you couldnt sell a 2 bed apartment in Dublin city center for €100k. People see the risk and arent willing to take it

GreeBo wrote: »

Why would you not get in if houseprices take a 30-50% cut? not necessarily for rental yields, but as a pension top up?

Do some calculations and figure out how much debt you will have vs how much will be in your pocket at the end of each year. Would that be worth it to you, no matter what the price of the property. And bear in mind rules may change and history tells us, not in favour of a landlord.

GreeBo

JimmyVik wrote: »

Do some calculations and figure out how much debt you will have vs how much will be in your pocket at the end of each year. Would that be worth it to you, no matter what the price of the property. And bear in mind rules may change and history tells us, not in favour of a landlord.

I already said its not about increasing income, its about increasing wealth.

fliball123

GreeBo wrote: »

Long term asset appreciation, which is made considerably easier if you buy during a "recession" as people are predicting (on here)

If I have 200K sitting in the bank, I buy a 400K house for 350 and pay 1K a month in mortgage over 20 years.

That 50K saving on the price pays a lot of mortage and any rental income goes on top. Even if I only break even I have an asset that will be worth more than 350K in 20 years (it will likely be worth more than that in 3-5 years)

You are also saving on the rent you were paying before buying the house

ittakestwo

GreeBo wrote: »

are they?
I posted this earlier:
https://asia.nikkei.com/Business/Markets/Property/Tokyo-property-prices-near-bubble-era-levels

Where are you getting your 40% from?

https://www.ceicdata.com/en/indicator/japan/real-residential-property-price-index

JimmyVik

ittakestwo wrote: »

I did give you an example... prices today in Japan are c. 40% below what they were in 1990

I meant do you have more than one country crashing with an advanced economy in the whole world?


And Japan is a cracking place now. Eathquakes, tsunamis, nuclear meltdowns, typhoons and and of course a huge property crash. I think theyve done well. Love the place.

Claw Hammer

fliball123 wrote: »

Maybe but its a viable option for some who don't want to take a hair cut on the price they might get and with an option of renting 5 months at a time and then giving the tenant a free day and then going another 5 months it puts an end to all this bullsh1t of 90 days notice if you want them out. It is only 28 days which is a bit more reasonable. So when the market bounces back maybe in 2, 3, 4, 5 years your ready to sell at a nice profit and with knowledge that mr tenant has paid a significant amount or even all your mortgage for you in that period

All very well until the RTB decides your free day is an attempt to circumvent or contract out of the legislation and there has been a continuous tenancy all along. This has caused issues before with commercial tenants.

FVP3

fliball123 wrote: »

Why do you reckon the price of housing will rise under this model?

This is pretty simple. Let's imagine you want to buy a house in an estate but the cheapest house is 200k. Let's say the 30 year mortgage on that is 1000 per month, but you can only afford 600 per month. A 50 year mortgage is introduced for everybody and you realise that you can now get a mortgage of 200k or more at that monthly payment, so you bid the 200k. Since buying a property is a bidding war you are now competing with the guy who could pay 1000 pm before. Pretty soon you will hit your limit and the person who can pay 1000 will end up paying 1000 again, because he is competing for that house with people who can nearly pay that per month. It's not unlike reducing interest rates and assuming that more people can buy houses.

To put it simply if there are 50 houses for sale and 100 buyers only 50 people can afford the houses, making the payments cheaper will just push prices up.

I also said when the person gets to pension age they could be paying the mortgage anywhere from 20 to 50 years there should be some equity in the house,

Equity in the house butter no parsnips. The house would either have to be sold and they would have to go into the rental sector, or keep paying a mortgage. Imagine having to do that now.

if the house still has a mortgage the person kids have the choice of taking on the rest of the mortgage and if they dont the house gets sold and the person gets their equity.

Kids inherit properties anyway, I don't think they want a mortgage attached.

I put this up as an outside the box thinking for those who are locked out of the market. Also can you or anyone else show me one location where property prices are less now than they were 50 years ago?

Irrelevant to the cost of a 50 year old mortgage when you are 80. Nobody wants outgoings like that when they are retired.

JimmyVik

GreeBo wrote: »

I already said its not about increasing income, its about increasing wealth.

And we all just have a heap of money sitting around that we are going to throw into that risky proposition, when there is the mother of all recessions getting underway.


I think i'll leave that kind of risk to others. And I dont see too many others taking it tbh

fliball123

Claw Hammer wrote: »

All very well until the RTB decides your free day is an attempt to circumvent or contract out of the legislation and there has been a continuous tenancy all along. This has caused issues before with commercial tenants.

Well the wheels turn slow and with the current situation where some tenants are legging it without holding up their end of the contract I cant see it happening. The current structure is almost unworkable being a landlor and at a push if they do change the legislation they could simple do rentals for 5 months and 28 days and then get a new tenant in. There will always be escape mechanism for those who dont want to be under the thumb of the tenant

FVP3

There probably wouldn't be much appreciation on a house bought on a 50 year mortgage, besides inflation, anyway. The price increase will be frontloaded.

pearcider

pearcider wrote: »

Wow the bulls are recommending 50 year mortgages now. Never mind the interest rate risk you are assuming. If interest rates rise, then you’re dead in the water. I would say again you won’t need a 50 year mortgage where we’re going.

Yeah they can stick their 50 year mortgages where the sun dont shine.

Prices need to be affordable. We are a small island with a small population. Housing should not ge the mess it is.

Greyian

fliball123 wrote: »

Supply is falling just as quickly as demand

You keep saying this and using MyHome as a reference.
You said yesterday there were 19013 properties showing up for sale on MyHome.
When I look now, there are 19015 properties showing up.

Has there been a boom in supply in the past 24 hours?!?!?!

Saying supply is falling quickly (or rising quickly) based on a change of a few units (or few dozen units) is madness.


Over half a million people have become unemployed in the past few weeks.
Others have suffered paycuts (in some cases, quite large ones).

A couple of units of fluctation in terms of the number of properties on MyHome is meaningless (and completely normal anyway).

We won't know exactly what supply and demand will be like next month, in 3 months time, in 6 months time, but what we do know is that there has been absolutely devastation in terms of a huge number of peoples financial standing, which will inevitably cause a sizeable drop in demand.

FVP3

I'd reduce mortgages to 20 years if I could.

FVP3

JimmyVik wrote: »

I am in the high tax bracket. Im comfortable on what I make.
I dont even do overtime when asked because of how much the tax man takes. Its not worth it to me. If he took less then yes i would do it.


No way in hell would I put up hundreds of thousands on a buy to let at the amount of tax i would be paying on profits. If there even were any profits.


Its a calculation that just doesnt not work out when I do it. High risk, very low reward, and goal posts movign every 6 months, never in your favour. I just dont see why anyone would get into it.

Yeh, ok, but let me reiterate what I said. Landlords don't pay 51% tax. There isn't a special landlord tax, theres an income tax. Some landlords can even have more than one property and not pay 51%. In fact older landlords often come into that category.

JimmyVik

FVP3 wrote: »

Yeh, ok, but let me reiterate what I said. Landlords don't pay 51% tax. There isn't a special landlord tax, theres an income tax. Some landlords can even have more than one property and not pay 51%. In fact older landlords often come into that category.

Im obviously not being clear what im saying.


What I am trying to say is that if I were to invest in property the amount of tax taken out of it when I calculate for my specific tax situation is not enough to justify me taking the risk. Thats for me. In cat I wouldnt even take that risk at half the tax id be paying on it. But I dont see how anyone else could take it either.

Claw Hammer

FVP3 wrote: »

Yeh, ok, but let me reiterate what I said. Landlords don't pay 51% tax. There isn't a special landlord tax, theres an income tax. Some landlords can even have more than one property and not pay 51%. In fact older landlords often come into that category.

Case 5 residential income is taxed in a different manner than other taxes. For example superannuation contributions to a pension fund are not allowed as a deduction. Expenses are treated differently as well with some not allowed at all.

ittakestwo

JimmyVik wrote: »

I meant do you have more than one country crashing with an advanced economy in the whole world?


And Japan is a cracking place now. Eathquakes, tsunamis, nuclear meltdowns, typhoons and and of course a huge property crash. I think theyve done well. Love the place.

But Europe is facing what Japan have been going through for years.They have been the only developed country to have faced this deflationary cycle so using them as a predictor of what might happen in Europe that is now staring down this path might be a good indicator of what is to come.

The characteristics which starts this deflationary cycle is, Low real growth rates (probably due to competition from emerging markets) Already low/no inflation and interest rates and an aging/falling population. That where Europe is going now

No other developed country has had this apart from Japan and look at how property prices are 40% lower today than in 1990 when the country peaked. What do you think the future will be for Europe?

fliball123

fliball123 wrote: »

Well the wheels turn slow and with the current situation where some tenants are legging it without holding up their end of the contract I cant see it happening. The current structure is almost unworkable being a landlor and at a push if they do change the legislation they could simple do rentals for 5 months and 28 days and then get a new tenant in. There will always be escape mechanism for those who dont want to be under the thumb of the tenant

JimmyVik wrote: »

And we all just have a heap of money sitting around that we are going to throw into that risky proposition, when there is the mother of all recessions getting underway.


I think i'll leave that kind of risk to others. And I dont see too many others taking it tbh

FVP3 wrote: »

This is pretty simple. Let's imagine you want to buy a house in an estate but the cheapest house is 200k. Let's say the 30 year mortgage on that is 1000 per month, but you can only afford 600 per month. A 50 year mortgage is introduced for everybody and you realise that you can now get a mortgage of 200k or more at that monthly payment, so you bid the 200k. Since buying a property is a bidding war you are now competing with the guy who could pay 1000 pm before. Pretty soon you will hit your limit and the person who can pay 1000 will end up paying 1000 again, because he is competing for that house with people who can nearly pay that per month. It's not unlike reducing interest rates and assuming that more people can buy houses.

To put it simply if there are 50 houses for sale and 100 buyers only 50 people can afford the houses, making the payments cheaper will just push prices up.



Equity in the house butter no parsnips. The house would either have to be sold and they would have to go into the rental sector, or keep paying a mortgage. Imagine having to do that now.



Kids inherit properties anyway, I don't think they want a mortgage attached.



Irrelevant to the cost of a 50 year old mortgage when you are 80. Nobody wants outgoings like that when they are retired.

OK you realise we can already get a 35 year mortgage here so its not that far off that, the bit that is missing is the multi-generational option, if the banks stick to there lending structures as in 20% or 10% for FTB and 3.5 times your wage. This will keep property prices down this has been proven in the market up until corona hit. I hear your increased competition argument but you only have to look at the market over the last decade every citizen in the country has been competing with buyers world wide including vulture funds and REITS and property has not gone up anywhere near where they were pre 2008 due to the banking regs. So there has been increased competition in that time and prices have not swarmed up to levels that they could get to as in pre 2008 prices.


You also forget the longer you have a property the likelihood is that in 50 years time that property will be worth a lot more. Can you name me one location on earth where prices are cheaper than 50 years ago so that equity that the person has built up can either be used for retirement home or the kids can take over the mortgage and parents can live their lives out rent free, it would of course be there choice but remember in 50 years time all property all over the world will be more expensive than it is today so what would you do accept the gift that your parents have given you as in they paid a large percentage of your mortgage for you and pay the rest and you have your house paid for or say no thanks dad, I will buy my own very expensive house?

Kids do inherit properties and would you not rather have a property with some mortgage paid off it or you save and pay for your own place?


Remember when someone is 80 and say they have paid the mortgage there are still bills coming in to be paid and most likely your going to have some type of illness that needs to be covered. When I am 80 I would love to have had a long number of years where I wasn't paying more on my mortgage so I could actually enjoy life in the hear and now, have my son take over the mortgage when I retire knowing I can stay in the house till I pop my clogs and also know that I have paid a large chunk of my sons house off. Now this would get dicey when there is more than one sibling but no doubt there would be ways and means to compensate.

I am only floating it as an option that seems to have worked over in Asia

fliball123

JimmyVik wrote: »

And we all just have a heap of money sitting around that we are going to throw into that risky proposition, when there is the mother of all recessions getting underway.


I think i'll leave that kind of risk to others. And I dont see too many others taking it tbh

Well the problem is there where would you put it, it actually costs money now to leave it in a bank, is it a bit risky to put it under the mattress, stocks and shares are more volatile than property ...At least in property you have the choice of someone else paying your mortgage, remember 100% of mortgage interest can be written off.

fliball123

Greyian wrote: »

You keep saying this and using MyHome as a reference.
You said yesterday there were 19013 properties showing up for sale on MyHome.
When I look now, there are 19015 properties showing up.

Has there been a boom in supply in the past 24 hours?!?!?!

Saying supply is falling quickly (or rising quickly) based on a change of a few units (or few dozen units) is madness.


Over half a million people have become unemployed in the past few weeks.
Others have suffered paycuts (in some cases, quite large ones).

A couple of units of fluctation in terms of the number of properties on MyHome is meaningless (and completely normal anyway).

We won't know exactly what supply and demand will be like next month, in 3 months time, in 6 months time, but what we do know is that there has been absolutely devastation in terms of a huge number of peoples financial standing, which will inevitably cause a sizeable drop in demand.

15 new properties added hardly a boom of supply? This morning it was down to 19006 so they must of just come on in the last few hours. This has to be looked at over a longer period as in from the start of corona where there is 2k less properties available on myome now as there was before the pandemic that is nearly 10% less available. That is evidence that supply is being drained away

I do agree we wont get a property understanding for at least 6 months on where demand / supply and unemployment are, and the majority of people on the dole are temporarily on there.

fliball123

Deleted User wrote: »

Yeah they can stick their 50 year mortgages where the sun dont shine.

Prices need to be affordable. We are a small island with a small population. Housing should not ge the mess it is.

A population that is increasing and with availability of land decreasing.

fliball123

FVP3 wrote: »

I'd reduce mortgages to 20 years if I could.

Just as a side what did you get your mortgage over and if it was more than 20 years could you at the time afford to get a mortgage over 20 years..Its ok for people to say this when they have their house not exactly fair to climb the ladder and then pull it up and put it out of reach for people trying to get on that ladder

fliball123

FVP3 wrote: »

Yeh, ok, but let me reiterate what I said. Landlords don't pay 51% tax. There isn't a special landlord tax, theres an income tax. Some landlords can even have more than one property and not pay 51%. In fact older landlords often come into that category.

I have dealt with your notion of taxes for landlords in a previous post and that it is a reasonable assumption the majority of landlords (non REITS or vultures) are paying 51% tax on rental profits.

GreeBo

ittakestwo wrote: »

https://www.ceicdata.com/en/indicator/japan/real-residential-property-price-index

Seems to contradict my link regarding prices....
but anyway, Japan has a population issue, which obviously causes demand problems.

GreeBo

JimmyVik wrote: »

And we all just have a heap of money sitting around that we are going to throw into that risky proposition, when there is the mother of all recessions getting underway.


I think i'll leave that kind of risk to others. And I dont see too many others taking it tbh

I didnt say "we all", but just because you dont, doesnt mean that a lot of other people dont.
Take a look at the amount of household money on deposit in Ireland, its around €100Bn, even if you take our the very wealthy, there is still a huge amount of cash waiting to be invested.

GreeBo

FVP3 wrote: »

I'd reduce mortgages to 20 years if I could.

So now only a tiny percentage of the population can buy a house....how does that help exactly?